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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Bill Harmond who wrote (7790)	7/1/2001 8:48:45 PM
From: craig crawford	Read Replies (1) \| Respond to of 57684

>> Considering that this year has seen the most aggressive Fed easing ever << have you taken into consideration that the market is lower than when greenspan began cutting rates and he is near the end of the line? >> and that the Chairman has said that his goal is to keep productivity (read IT budgets) growing << alan greenspan can't force people to buy things they don't need can he? if people don't need technology because they overspent during the past 5 years, perhaps all that money and credit he is creating will go to more worthwhile ventures such as exploration for natural resources and for production of commodities which are in short supply. not the oversupply in technology that we are facing. furthermore, spending on IT doesn't have to stop! i told you this before. spending may continue, but companies won't be able to charge the kind of prices that they could when their equipment and technology was in short supply! >> There's something about an idea like the Web and the Internet whose time has come: It keeps coming. << yes and i'm sure people said that back in the 1920's and 1930's when electric utilities were the hot item. i bet they were saying to themselves, "there's something about an idea like electricity and powered machinery whose time has come." i'm sure automobiles and electric utilities had a great impact on productivity back then. it still didn't stop car sales from plunging and it didn't stop the depression from happening. bill, no one is saying that the internet and all the infrastructure needed to support it will cease to exist. it just won't grow at the record pace and levels of profitability seen in the past 5 years. you keep driving home the point that bandwidth is going to explode. so what? did demand for memory explode? yes, bill gates said 640k out to be enough for anybody 20 years ago. yet i have 400 times that much memory in my computer right now. and it probably cost me less than 640k did 20 years ago. did the demand for microprocessor speeds increase? yes, you can buy an intel processor that is 15 times faster than what was available just 5 years ago for about the same price. did the demand for storage increase dramatically in the past decade? sure. i have a hard drive 30 times larger than i did 5 years ago, yet it cost less. did the demand for bandwidth surge with the advent of the internet? of course. even though i use infinite more amounts of data through my telephone lines i have been paying less and less per minute for my phone calls. you have never have refuted this point bill. you have never satisfactorily answered my assertion that bandwidth will continue to grow at high rates like you would hope, but not necessarily profitably for the companies supplying that bandwidth. memory chip companies have had spotty profits over the years. hard drive companies have struggled with profitability over the years. microprocessor companies have struggled with profits over the years with the exception of intel, which is essentially a monopoly. now we are seeing companies that sell long-haul capacity losing money. they were immensely profitable companies just a year or two ago and now they are losing billions by the month. the next natural progression in the chain of events is companies that provide short-haul bandwidth to get their profits squeezed as overcapacity sets in. from an article you posted here a few days ago. "According to RateXchange, an electronic broker that helps carriers trade bandwidth capacity, a connection running at 155 mbps (megabits per second) from Los Angeles to New York cost about $45,000 a month last October. That price fell to $35,000 in March and is expected to slip to $2,450 in January 2002." if bandwidth prices are plummeting that fast, how can companies realistically expect to maintain the fat margins they have grown accustomed to? obviously they can't, and that's why large companies like cisco are out for blood. not good if you're the stockholder of a smaller less entrenched competitor.